New Zealand Is Tired of Its Fiscal Crash Diet

New Zealand Is Tired of Its Fiscal Crash Diet

Article excerpt

Late last year, John Woods, New Zealand's ambassador to the
United States, was pleasantly surprised to receive a fan letter -
from Speaker of the House Newt Gingrich.

"As we attempt the changes that we believe are best for the US,"
Mr. Gingrich enthused, "it is encouraging to hear that these kind
of changes can be done and succeed in their objectives." New
Zealand's economic story, he said, was "a shining example of the
scale of change" that the budget-slashing GOP hoped to usher into
Washington.

Well, maybe not. If the political pollsters are to be believed,
this story may have a different ending when a new government is
elected this Saturday.
At issue are the policies of the past 12 years, which have
transformed one of the developed world's most-regulated economies
into one of its most-open and competitive. Those policies have
included reducing trade tariffs, scrapping government subsidies,
financial-market deregulation, privatization, and tax reform.
Inflation is kept on a tight leash by the central Reserve Bank.
The choice facing voters is mostly seen as a referendum on all
or some of the above. Earlier this year, it looked as if the
election might center on race relations - between the native Maoris
and the majority Europeans - but even that perennial issue has
taken a back seat to the question of the economic future.
Not everyone in this South Pacific nation of 3.7 million appears
to be as gung-ho as Gingrich about it.
Contesting the election is a smorgasbord of 23 parties, of which
four are considered serious contenders, with the governing
conservative National Party being the single-most popular. Under a
new proportional-representation system, a single party is unlikely
to gain a clear majority, and the next government will rule through
a coalition. In that event, the next prime minister could be Labor
Party leader Helen Clark.
Fiscal conservatives worry that any change of course - even if
it is toward the center, as is widely supposed - will be at the
expense of the reforms.
"Don't risk throwing it all away," implores Prime Minister James
Bolger, leader of the governing National Party, who has spent much
of the current campaign reminding voters that "the best social
policy is a strong economy." But his opponents accuse him of
getting it backward: The best economic policy is a strong social
policy, they argue.
Opposition parties are promising more public spending on
education, social welfare, and health. "If you believe the economy
is about people, not money - then so do we," claims the opposition.
"People want a new, moderate course," declares Jim Anderton,
leader of the center-left Alliance. "For too long, the 'center' has
been a dirty word. …